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Ruling on Uber drivers gives gig economy a leg up in SA

The relationship is acknowledged to be a purely contractual one in which the company is a facilitator, not an employer, writes Robert Kayihura

31 January 2018 - 05:54
Robert Kayihura

New model: Uber drivers are entrepreneurs, and the company is not their employer, a court has ruled. Uber follows a collaborative business model that will play a critical role in bridging social and economic barriers in developing countries. Picture: DAVID HARRISON

Entrepreneurs and small businesses are the lifeblood of any economy. This is particularly true of an emerging economy such as SA, where a legacy of inequality, combined with significant socioeconomic barriers, lead to high levels of unemployment.

An economic system that enables as well as promotes entrepreneurial thinking and creates opportunities for people to generate their own income is critical in emerging economies.

Many entrepreneurial ventures that become successful grow into sustainable small and medium-sized enterprises, which create jobs and other vital economic opportunities.

For all of these reasons, the "gig" economy has been broadly embraced by South Africans. It’s a unique way of working — individuals get paid for each transaction or piece of work, or "gig" that they complete, rather than being employed and receiving a predetermined salary.

In July 2017, the Commission for Conciliation, Mediation and Arbitration (CCMA) determined that a number of Uber driver-partners should be considered employees of Uber SA.

This followed a case brought by seven driver-partners whose contracts with Uber had been deactivated for various reasons. The claimants were seeking compensation on the basis of unfair dismissal, which required them to be recognised by the law as employees of Uber SA.

While the CCMA ruled in favour of the drivers, determining that they were employees of Uber SA, the Labour Court effectively overturned that ruling in January, confirming that Uber’s relationship with its drivers is a purely contractual one in which the company effectively plays the role of a business facilitator for independent drivers rather than being their employer. Uber is a prime example of a collaborative business model that will play a critical role in transcending the socioeconomic barriers not just in SA, but in all developing and emerging countries.

We offer the technology by which independent transportation service providers (driver-partners) can easily access income-earning opportunities that were out of reach just a few years back.

Uber does not employ the driver-partners. But using our technology through the Uber App, we connect people who provide transportation services with others who need rides.

The drivers who use the Uber app are totally free to choose if, when and where they accept rider requests; they are not obligated to work a required number of hours or shifts. Many companies across the world take a similar approach, not least of which is the highly successful Airbnb, which uses technology to connect property owners with travellers to facilitate vacation rentals; Upwork, which connects businesses to all types of freelancers for short-term or long-term projects; and SweepSouth, in SA, which connects homeowners with home cleaners.

None of these organisations employs the individuals who use their technology to connect to earning opportunities; Uber operates in the same way.

For most skilled individuals who participate in the gig economy in this way, the main appeal is the freedom and flexibility that they enjoy.

They can choose to work when they want to, and only on projects that interest them. They are effectively their own bosses, with the opportunity to leverage their relationships to grow their own business as and when they want.

The opportunities created by the gig economy are not limited to people living and working in developed countries.

This model will, provided that there are strong private-public partnerships and smart regulations, unlock large income opportunities for hundreds of millions of people — particularly the young — in developing and emerging countries.

Through dialogue and collaboration, companies working in partnership with the government can build a shared vision that helps to reverse the scourge of unemployment and contribute substantially to the achievement of the UN Sustainable Development Goals of fair employment, equitable access to income opportunities, poverty alleviation, and gender equality.

Where governments or individuals try to force tech companies into obsolete employment or other regulatory frameworks, the companies will not set up or invest in those markets, and SA cannot afford to have its young people shut out of the digital age

It’s for all these reasons that the recent ruling by the Labour Court, that a group of former driver-partners are not employees of Uber SA, is so important and so economically valuable for millions of South Africans.

Where governments or individuals try to force tech companies into obsolete employment or other regulatory frameworks, the companies will not set up or invest in those markets, and SA cannot afford to have its young people shut out of the digital age.

However, equally important is the fact that technology companies will only thrive if they invest in long-term and durable growth strategies that ensure that the independent contractors and consumers who rely on their innovations derive fair and maximum value for their time and effort.

No one will be forced into the gig economy. But those who embrace the value proposition that has been created by the digital age, and who want to participate as independent partners, rather than employers or employees, are entitled every opportunity to make their living on their own terms.

SA is still very early in the process of envisioning a new reality and way of working, and the recent Labour Court ruling represents an important step towards a more promising and inclusive future for all.

• Kayihura is the legal director of Uber Middle East, Africa and Pakistan.